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Analyst weighs in on recent boat sales

Increasing sales demonstrated by numbers released by Statistical Surveys today show that there is pent-up demand in boat sales.

Improved weather provided a modest April recovery and the benefit is expected to extend through the second quarter, Wells Fargo analyst Tim Conder wrote.

Sales of fiberglass outboard boats from 11 to 40 feet increased 11.3 percent and sales of aluminum pontoons decreased 0.3 percent.

Weather materially affected first-quarter retail sales — which are typically seasonally slow — with some manufacturers holding shipments to reduce channel inventory build, Conder wrote.

“Industry fundamentals remain sound, in our view, with clean channel inventories and new/used market dynamics lifting new unit sales,” Conder wrote. “We reiterate our full-year U.S. industry unit sales estimate of +8-9 percent in the traditional powerboat segment. Non-traditional segments of ski/wake boats and PWC will likely enjoy low double-digit growth.”

Brunswick’s first-quarter results showed noticeable weather impact and Wells Fargo expects the company to regain lost business during the second and third quarters.

“We believe management is indifferent to the rotation away from midsize sterndrive boats to aluminum and fiberglass boats as long as a Mercury engine is attached,” Conder wrote. “Mercury is Brunswick’s largest and most profitable business.”

Inboard fiberglass units increased 13.8 percent at Brunswick in April and sterndrive sales declined 0.8 percent.

Malibu Boats lost some market share throughout March, but the overall segment outperformed at retail, with units up 24.4 percent in April and 19.7 percent for the year to date.

The share loss also occurred during a quarter that accounts for less than 13.7 percent of annual volume and “excluded a few key MBUU states,” Conder wrote. “Management confirmed stronger April retail trends, with Europe and Australia also contributing.”

Wells Fargo analysts predict Malibu will capture adjacent market share to continue outperforming the segment.

Conder also predicts that BRP’s entry-level Spark PWC will be a catalyst for industry growth after a 14-year decline. PWC sales gained momentum, with units up 28 percent in April and 20.7 percent for the year to date.

“Existing product pricing had been cost-prohibitive to trial consumers,” Conder wrote. “The Spark should also help Sea-Doo’s entry into target developing markets. Evinrude is benefiting from strong outboard boat trends, but has underperformed modestly as engine sales for new boats outpace the repower business, where Evinrude is concentrated.”

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